1. Management 11e John Schermerhorn
Chapter 3
Ethics and Social Responsibility

2. Planning Ahead — Chapter 3 Study Questions
What is ethical behavior?
How do ethical dilemmas complicate the workplace?
How can high ethical standards be maintained?
What is social responsibility and governance?

3. Study Question 1: What is ethical behavior?
Ethics
Code of moral principles.
Set standards of “good” or “bad” or “right” or “wrong” in one’s conduct.
Ethical behavior
What is accepted as good and right in the context of the governing moral code.

4. Study Question 1: What is ethical behavior?
Law, values, and ethical behavior:
Legal behavior is not necessarily ethical behavior.
Personal values help determine individual ethical behavior.

5. Study Question 1: What is ethical behavior?
Law, values, and ethical behavior:
Values - underlying beliefs and attitudes that help determine individual behavior
Terminal values - preferences about desired ends
Instrumental values – preferences regarding the means to desired ends

6. Study Question 1: What is ethical behavior?
Alternative ethical views
Utilitarian
Delivers the greatest good to the most people
Individualism
Advances long-term self-interests
Moral rights
Maintains fundamental rights of all human beings

7. Study Question 1: What is ethical behavior?
Justice view of ethics
fair and impartial treatment of people according to legal rules and standards
Procedural justice – policies and rules fairly applied
Distributive justice – equal treatment for all people
Interactional justice – people treated with dignity and respect
Commutative justice – fairness to all involved

8. Four views of ethical behavior
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9. Study Question 1: What is ethical behavior?
Cultural issues in ethical behavior:
Cultural relativism
Ethical behavior is always determined by cultural context.
Universalism
Behavior unacceptable in one’s home environment should not be acceptable anywhere else.
Ethical imperialism
Imposing one’s ethical standards on others.
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10. The extremes of cultural relativism and ethical imperialism in international business ethics.
Source: Developed from Thomas Donaldson, “Values in Tension: Ethics Away from Home,” Harvard Business Review, vol. 74 (September-October 1996), pp
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11. Study Question 1: What is ethical behavior?
Sources of information on ethical behavior:
Institute for Global Ethics at and on Facebook at
Ethics Resource Center at
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12. Study Question 2: How do ethical dilemmas complicate the workplace?
An ethical dilemma
occurs when choices, although having potential for personal and/or organizational benefit, may be considered unethical.
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13. Study Question 2: How do ethical dilemmas complicate the workplace?
Ethical dilemmas include:
Discrimination
Sexual harassment
Conflicts of interest
Product Safety
Organizational resources
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14. Checklist for ethical dilemmas
Step 1 Recognize the ethical dilemma.
Step 2 Get the facts.
Step 3 Identify your options.
Step 4 Test each option: Is it legal? Is it right? Is it beneficial?
Step 5 Decide which option to follow.
Step 6 Ask the Spotlight Questions: To double check your decision.
“How would I feel if my family found out about my decision?”
“How would I feel if my decision was printed in the local paper or posted online?”
Step 7 Take action
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15. Study Question 2: How do ethical dilemmas complicate the workplace?
Influences on Ethical Decision Making
Ethical framework
Provides personal rules or strategies for ethical decision making
Includes personal values
Honesty
Fairness
Integrity
Self-respect
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16. Kohlberg’s stages of individual moral development
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17. Study Question 2: How do ethical dilemmas complicate the workplace?
Situational Context and Ethics Intensity
Will the situation pose an important ethic challenge?
Magnitude of the situation
Risk of immediate harm
Proximity and concentration of harm
Social consensus
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18. Study Question 2: How do ethical dilemmas complicate the workplace?
Organizational Culture Influence
What is considered ethical behavior within the organizational context?
What are the expectations of management?
What are the expectations of co-workers?
Is there a code of ethics?
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19. Study Question 2: How do ethical dilemmas complicate the workplace?
External environment
Government laws and regulations
Societal norms and values
Competitive climate in an industry
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20. Study Question 2: How do ethical dilemmas complicate the workplace?
Ethical behavior can be rationalized by convincing yourself that:
Behavior is not really illegal.
Behavior is really in everyone’s best interests.
Nobody will ever find out.
The organization will “protect” you.
Management 11e – Management 11e/ Chapter 3

21. Study Question 3: How can high ethical standards be maintained?
Ethics training:
Structured programs that help participants to understand ethical aspects of decision making.
Helps people incorporate high ethical standards into daily life.
Helps people deal with ethical issues under pressure.
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22. Study Question 3: How can high ethical standards be maintained?
Codes of Ethical Conduct
Formal statement of an organization’s values and ethical principles regarding how to behave in situations susceptible to the creation of ethical dilemmas
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23. Study Question 3: How can high ethical standards be maintained?
Moral Management
Managers behave in one of three ways
immoral manager
Chooses to behave unethically
amoral manger
Disregards ethics of actions, intentionally or unintentionally
moral manager
Considers ethical behavior as a personal goal
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24. How can high ethical standards be maintained?

25. Study Question 3: How can high ethical standards be maintained?
Areas often covered by codes of ethics:
Bribes and kickbacks
Political contributions
Honesty of books or records
Customer/supplier relationships
Confidentiality of corporate information
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26. Study Question 3: How can high ethical standards be maintained?
Whistleblowers
Expose misdeeds of others to:
Preserve ethical standards
Protect against wasteful, harmful, or illegal acts
Laws protecting whistleblowers vary
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27. Study Question 3: How can high ethical standards be maintained?
Barriers to whistleblowing include:
Strict chain of command
Strong work group identities
Ambiguous priorities
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28. Study Question 3: How can high ethical standards be maintained?
Organizational methods for overcoming whistleblowing barriers:
Ethics staff units who serve as ethics advocates
Moral quality circles
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29. Study Question 3: How can high ethical standards be maintained?
Social entrepreneurship:
a unique form of entrepreneurship that seeks novel ways to solve pressing social problems at home and abroad
Housing and job training for homeless
Bringing technology to poor families
Improving literacy among disadvantaged youth
Offering small loans to start minority-owned businesses
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30. Corporate social responsibility and governance:
Study Question 4: What is social responsibility and corporate governance?
Corporate social responsibility and governance:
Looks at ethical issues on the organization level.
Obligates organizations to act in ways that serve both its own interests and the interests of society at large.
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31. Stakeholder Management
Study Question 4: What is social responsibility and corporate governance?
Stakeholder Management
Stakeholders
persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance.
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32. Typical organizational stakeholders
Study Question 4: What is social responsibility and corporate governance?
Typical organizational stakeholders
Organization
Employees
Customers
Suppliers
Owners
Competitors
Regulators
Interest groups
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33. Perspectives on social responsibility:
Study Question 4: What is social responsibility and corporate governance?
Perspectives on social responsibility:
Classical view
Management’s only responsibility is to maximize profits.
Socioeconomic view
Management must be concerned for the broader social welfare, not just profits.
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34. Study Question 4: What is social responsibility and governance?
Arguments against social responsibility:
Reduced business profits
Higher business costs
Dilution of business purpose
Too much social power for business
Lack of public accountability
Arguments in favor of social responsibility:
Adds long-run profits
Improved public image
Avoids more government regulation
Businesses have resources and ethical obligation
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35. Criteria for evaluating corporate social performance.
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36. Strategies for pursuing social responsibility:
Study Question 4: What is social responsibility and corporate governance?
Strategies for pursuing social responsibility:
Obstructionist
meets economic responsibilities.
Defensive
meets economic and legal responsibilities.
Accommodative
meets economic, legal, and ethical responsibilities.
Proactive
meets economic, legal, ethical, and discretionary responsibilities.
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37. Four strategies of corporate social responsibility—from obstructionist to proactive behavior.
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38. Study Question 4: What is social responsibility and governance?
Corporate governance:
The oversight of the top management of an organization by a board of directors.
Corporate governance involves:
Hiring, firing, and compensating the CEO.
Assessing strategy.
Verifying financial records.
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39. Study Question 4: What is social responsibility and governance?
How government influences organizations:
Common areas of government regulation of business affairs:
Occupational safety and health
Fair labor practices
Consumer protection
Environmental protection
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40. Patagonia: Turning a profit without losing your soul
Chapter 3 Case
Patagonia: Turning a profit without losing your soul
Management 11e/ Chapter 3

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